What is the difference between private placement and preferential issue

First of all ,both are governed by Seperate section ,Viz.Pvt placement by (Sec.42) ,while preferential allotment by (Sec.62) ,but one should also comply with provision of sec.42 in case of preferential allotment ...

Now ,If you interpret both the words Pvt & Preferential,then meaning of Pvt will be "something which is done in Pvt in nature " ,while preferential means "giving priority over others ",Generally ,companies need to give further offering to existing shareholders ,whenever it needs additional fund through issue of shares ,But except insiders ,if such offer is given to identified persons ( generally ,prospective investor ),then It has to identify person(s) and go through board & shareholders approval to allot certain shares to them ,It's called Pvt Placement of securities ....

If such offer of additional securities given to selected existing group of shareholders ( obviously with whole process of Board & Shareholders approval ) then it called preferential allotment (Like offered shares to Promoter /Promoter group ) Or any other class of existing shareholder ..

Lastly ,You originally asked query for " Preferential issue ",which is defined in SEBI(ICDR) Regulations ,which is at par with Sec.42&62 of co.act 2013 ( except issue of shares warrant to promoters )